food delivery fundraising strategy

Fundraising Strategy For Food Delivery Startup: Things To Know

If you are willing to start your own food delivery startup, then it is important to deeply about the business models and which business model is important to achieve success. Startups are often established with bright and innovative ideas. But even the best idea can eventually fade if you cannot execute it properly in a practical situation. This is the reason why every successful food delivery startup has a profitable and sound business model. Also, choosing the apt Fundraising Strategy For Food Delivery Startup is equally crucial. 

food delivery app idea

But building a business model is not enough, you also have to turn your idea into a sustainable and profitable business. You have to determine which marketing channels as well as strategies you need to use to effectively reach the potential customer and how you are going to present your offers so that you can grab a huge customer base. 

Overview Of A Food Delivery Business Model

food delivery business model

A business model means a strategy which a business develops to earn profit. It is a detailed report on how a food delivery startup plans to deliver quality foods to its customers at an affordable price. The food delivery startup needs to plan which type of food should be sold to the specific market. It is extremely important for any company to build a business model regardless of the size of the company. In fact, a business model will help the new and emerging companies to get investors,  find potential employees, and motivate managers. On the other hand, companies that are well established should also have a business model which they regularly need to study and update. While developing your business model you need to test out various ways to design the cost, revenue streams, and revenue, models. 

Related read: 3 Ondemand Food Delivery App Business Models That You Should Know About

Understanding On-Demand Food Delivery Business Models

If you want to understand how an online food delivery business works you need to deeply understand their business models. There is not a single type of food delivery business in India. There are various types and their differences are largely the outcome of the business models they follow. However, the three main business models which are mainly followed by a majority of online food delivery businesses are discussed below: 

Order Only Model

order only model

Most of the early on-demand food delivery services follow the order-only models. According to the business model, start just works as the facilitator of the order and helps in delivering food between the restaurants as well as the customers. The business mainly aims to gather more orders as in this model it is not focused on value,  over time the food delivery services switched to other mature models.

Aggregation Model

aggregation model

The aggregation model has come up as the more mature model by highlighting the shortcomings of the first generation order facilitator model. Although this model is focused on the delivery of the food and leaves the cooking to the restaurant,  it allows listing of all the available restaurants on the basis of food as well as order availability,  customer preference,  quality ratings,  food types, and various other parameters. This model optimizes the business opportunities while lifting the vendor restaurant and taking the responsibility for the delivery system. 

Integrated Model

integrated model

The integrated model mainly focuses on the entire value chain starting from the placement of order to cooking to the delivery process. This type of service became popular among the restaurants and the food makers who wanted to earn huge revenue by ordering food directly to their customers’ doorstep. In this business model,  the restaurant is the only one who will be responsible for the food quality as well as the delivery. Not only this but also this model was introduced to hub kitchens catering to particular locales with various menu options. 

Related read: Contactless Dining & Restaurant Ordering System: An Ultimate Guide

Plan Out The Right Strategies For Your Food Delivery Startup

It is very important to make your food delivery service quite unique from others by coming up with unique and exotic food in the market. These days online businesses are facing tough competition. So, before you start with planning your Fundraising Strategy For Food Delivery Startup, plan out your business strategies first. 

Analyze The Market Demand

food delivery market demand

The food and the catering industry is recently gaining popularity which contributes to the economic growth of the country. There is always a huge demand for homemade food but it does not always mean that you will simply start your food delivery business without any knowledge of the market. This is because online business is still a very fresh thing that requires technical knowledge and help. It is very important that you need to start your business up in such an area where people can easily order food online. Setting up an online food business in certain areas where people generally don’t use their smartphones is not a good idea.

Select Your Niche

You may have knowledge in preparing all types of food no matter what the cuisine is,  your ultimate goal is to make people lick their fingers after having your dishes. But that does not always mean that you will be preparing all types of food for cloud kitchen services. This is the reason you need to select the proper niche to get noticed in the on-demand food business. Following are some of the unique ideas that you can implement:

  • You can prepare snacks for targeting teenagers as well as college students.
  • You can also opt for full course homely meals for the families.
  • Serving the lunch tiffin is also a great idea to attract corporate employees. 

Hire Reliable Delivery Persons

food delivery partner

You need to understand the fact that the online food delivery business is all about home delivery. Just making delicious food is not enough if you cannot deliver your food to your customers at the right time. This is the reason you need to hire delivery persons who will be responsible to deliver the food to the doorstep of your customers so that they can enjoy the delicious and lip-smacking food while it is still smoking hot. Make sure the delivery person can deliver the food in perfect condition. It would be good if they have two-wheelers of their own, otherwise, you need to make the extra investment to provide them with two-wheelers for your food delivery. 

Customers mainly seek the timely delivery of the food. After all, it makes no sense to wait for such long hours anticipating the delivery of the food. So it is always important to take care of your customers’ demands. In this digital era, you can even collaborate with a food delivery partner who will take care of the delivery, payment, menu handling, and customer complaints on your behalf. Not only this but this will also reduce your responsibilities and you can use your valuable time to increase the flow of orders and improve the quality of your food. 

Related read: Be The Next UberEats Food Delivery App With This Complete Guide

How To Choose The Right Fundraising Strategy For Food Delivery Startup

When you’re planning to start a new business the only thing you care about is the arrangement of the funds and the initial stages of investment. So we would highly suggest you keep your attention aside because skills and the ability to cook are the two most important things which can take your business to the ladder of success. In fact, you don’t even have to set up a restaurant and spend lots of money on its maintenance. Thereby, you need to opt for the right Fundraising Strategy For Food Delivery Startup. 

Cloud kitchen service is in trend right now which can transform your home into a workplace. You can set up this with a low budget by cutting the cost of a new setup and hiring the employees. Even if you need some money you can always approach for a loan from any trusted Bank. But make sure not to take credit beyond your capacity because it takes some time to earn profit. 

Marketing Your Online Food Delivery Startup

food delivery business marketing

You may have the skills and potential to prepare the best food but always remember that it takes some time for your business to earn profit. You need to have patience because it takes time for the customers to start knowing your business and keep coming back for more. You cannot expect from the world that it would immediately know about your food business as soon as you are listed on the internet. And for this unit to go for proper marketing if you want to take your food delivery startup to great heights. In this modern era, social media is proving to be a boon for every business, and having an attractive and consistent social media profile is very important for any on-demand food delivery business. Nowadays people spend most of their time maintaining an active presence on social media and this way they can come to know about your brand. 

Tips For Promoting Food Delivery Business

food delivery app

One of the best things that you can do with the affordable range is digital marketing. Digital marketing can take your online food delivery startup to another level. When your business starts growing you can further approach different other options when it comes to promoting your business. Spending extra money and getting a television or newspaper advertisement might also help your business to earn profit. 

  • First on developing your Instagram page and providing regular updates about your food business.
  • Make sure to update the pictures of the mouth-watering dishes which will lure everyone.
  • Social media marketing helps businesses to stay in touch with their existing customers while reaching out to potential new customers at the same time.
  • You can also Indus the view through some attractive giveaways to attract more followers

Important Fundraising Strategies For Your Food Delivery Startup

food delivery startup

Now we will have a look at some of the important options for financing or Fundraising Strategy For Food Delivery Startup:

Start Saving

If you are willing to start your own food delivery business it is always best to invest your own money. There are many startups that always look for investment when they are running out of their money. The main advantage of this strategy is that you will not have to pay any depth to any institution. In the case of the online food delivery business, we would recommend you to use the SaaS platform and develop your app, and then start attracting customers organically. Once you say that the organic strategy is helping you to earn profit you can begin making a few transactions in the form of investment. 

Crowdfunding

food business crowdfunding

When it comes to a new startup crowdfunding is one of the best ways to raise money. Crowdfunding helps the startup with more financial freedom as compared to various other sources of funding. In fact, there are many crowdfunding platforms that help companies to raise funds in exchange for equity.

Business Line Of Credit

At the initial stages of starting your food delivery business,  you will not be able to estimate the total expenses required over a period of time. You will see that the funds are needed here and there and not all at once. And this is where the business line of credit helps as it is an excellent source of funding for the same. A business line of credit is a hybrid bank loan as well as a credit card which will allow you to withdraw against a pre-approved amount of financing and the interest is paid only for that borrowed amount.

Pros:

  • You need to pay interest only for the funds that you have withdrawn.
  • Suitable for all types of food delivery business models.
  • A lower credit score is accepted.
  • Capital is available when required.

Cons:

  • Document verification is needed on each withdrawal.
  • Higher rate of interest for lower credit scores.

Inventory Purchasing

inventory

Sometimes online businesses can slow burn but there are times when there will be a great demand for your food and you do not have the resources to fund your supply. In such cases, inventory financing will help. The lender will be finding a large portion of your production cost to the seller and you only have to pay interest to the lender.

Pros:

  • Easy to qualify
  • Flexible funding
  • A great option for the startups
  • No personal guarantee is needed

Cons:

  • Short term funding
  • The fees are extremely high
  • Unavailable for service businesses
  • 100%  financing is not guaranteed 

SBA Loans

Small business administration guarantees give loans. This government agency offers loan guarantees up to 85%  of the loan amount acquired from the SBA-approved lenders. Getting such loans is not easy and is extremely time-consuming. To get SBA  knowledge it is important to have a good credit score for qualifying.

Pros:

  • Long term payments
  • Reasonable interest rates
  • Lowest down payment

Cons:

  • Collateral is required
  • Lengthy paperwork
  • The approval takes a longer time

Venture Capital

venture capital

If you want to take your business to a large level and you require funding of the order of $700,000 odd even millions that venture capital is the perfect option for you. Venture capital is on the Lookout for those companies which have significant differentiation from their competitors. Getting venture capital funding is time-consuming which needs a lot of hard work. Here you don’t have to pay any interest for the amount received but its stake in the company is provided to the investors.

Pros:

  • No fees are charged
  • Large capital requests

Cons:

  • Lower financial freedom
  • Owner’s equity is reduced

Start By Choosing The Apt Fundraising Strategy For Your Food Delivery Startup

app for food delivery

Whether you are planning to start your food delivery startup or you already own one,  it is exciting to become your own boss. The only thing you need to do is to start to validate your idea,  grow your transaction and then search for investment opportunities. If financing is the only thing that is the main concern of you then there are many options out there for food delivery startups to succeed. 

Need one-one conversation with AllRide food delivery experts on this? You can right away connect with the industry experts who can not only help you to ace your project idea but also build one. 


Swarnendu De

Swarnendu De is the Co-founder of Innofied, an Award winning Mobile apps, Web apps, and Game development company. He manages the technical operations and leads the design and development teams there. He is the author of an advanced JavaScript book: Backbone.js Patterns and Best Practices.  He regularly writes at his personal blog, company blog, LinkedIn and the Tuts+ network. Swarnendu lives in Kolkata – the city of joy. He loves traveling, photography & fishing.

Close icon